Car insurance for newcomers to Canada

Written by Seamus McKale

Reviewed by Daniel Mirkovic

Updated June 20, 2024 | Published June 14, 2024

Car insurance in Canada can be confusing. It’s required by law everywhere, but it works differently in each province and territory.

If you’re new to Canada and wondering how car insurance works, this is the guide for you. Like anyone else in the country, newcomers and visitors to Canada need car insurance if they own a vehicle.

We’ll explain how car insurance works and how to buy it. We’ll also explain how to exchange a foreign driver’s licence and how foreign driving experience works for insurance.

Thumbnail showing an older man leaning into the driver's side window of a car, as a younger person sits behind the wheel

The important points

  • Car insurance is mandatory in Canada; every vehicle must be insured before it’s driven on public roads.
  • Car insurance is different in each province and territory, but the differences are relatively small.
  • Insurance providers may or may not honour foreign driving and insurance experience.

Canadian car insurance basics

In Canada, car insurance is required by law — you cannot drive without insurance, ever (at least on public roads). Driving without insurance carries a fine of anywhere from $500 to $5,000 for a first offense, depending the province.

Each province and territory sets its own rules for car insurance, including minimum levels of coverage. (But don’t worry, you won’t be able to buy less than the minimum coverage in your home province.)

Luckily, the differences in car insurance between provinces are rather small. Three provinces (BC, Saskatchewan, and Manitoba) have public car insurance companies. Every driver in these provinces buys their basic car insurance from the public insurer, while private insurers sell optional car insurance packages and increased limits. In every other province and territory, private companies sell all car insurance, both required and optional. In Quebec, public insurance covers bodily injury, while private insurance covers damage to cars and other property.

We’ll cover how to buy car insurance in the next section.

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Every car insurance policy combines several types of coverage. Some are required, some are optional:

  • Third-party liability. This is the basic coverage everyone needs to drive. It protects you if you are legally responsible for damage or injury to others while you’re driving.
  • Collision. This is usually optional. Collision covers damage to your own car when you’re responsible for an accident.
  • Comprehensive. Also usually optional, this covers damage to your car from events that aren’t vehicle accidents. That includes things like theft, fire, or running into a live animal — a common occurrence in Canada.
  • Direct Compensation for Property Damage (DCPD). DCPD only exists in Alberta, Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and PEI. Quebec has the very similar Direct Compensation Agreement. It’s usually required, but some provinces allow drivers to opt out of it. DCPD covers damage to your vehicle when another driver is responsible.
  • Accident benefits. This is a collection of coverages that are part of all car insurance policies. Accident benefits cover many things, including accident-related medical or rehabilitation costs. They also cover lost wages if someone can’t work because of an accident, and even funeral costs.

Finally, there is all perils coverage, which combines collision and comprehensive coverage, plus extra theft coverage. It’s the best type of car insurance coverage you can buy.

Collision and comprehensive are usually optional. But, if you lease your car, or borrow money to buy it (known as financing), you will have to buy both.

If your family has multiple cars, you can usually buy one car insurance policy to cover all of them. Insurers often offer a discount for insuring multiple vehicles with them. You can still insure each vehicle separately if you prefer.

How to buy car insurance in Canada

You can buy insurance either directly from an insurance company (insurer), or through an insurance agent or broker. Brokers are people or companies that sell insurance on behalf of insurers. Not all insurers sell directly to customers; it’s common to buy car insurance through a broker. It’s also common to buy car insurance online.

Either way, it should only take a few minutes of your time to get a car insurance policy.

Shop around

Most people get car insurance quotes from multiple insurance providers to compare the prices. Or, if you’re buying from a broker, they will usually get multiple quotes for you.

Quotes are price estimates for insurance. Sometimes they are rough estimates based on partial information, but usually you’ll complete a full application and learn the real price you’ll pay. If you get a quote, you don’t have to go through with the purchase. But quotes don’t last forever; insurers will only honour a quote price for a limited time (often less than 30 days).

In BC, Saskatchewan, and Manitoba, you don’t need to shop around. You’ll pay the same price for car insurance no matter which broker you buy from, since all basic policies come from the public insurers. If you want to buy optional private insurance, you can shop around just as one would in other provinces, of course.

Provide your information

To get quotes or buy a policy, you’ll need to provide some basic information. Insurers use this information to calculate the price of your car insurance. Make sure you have the following ready for your application:

  • Driver’s licence information for yourself and all the licenced drivers in your home (including family members and unrelated roommates)
  • Information about each of your vehicles, including the make, model, year, and vehicle identification number
  • Your current car insurance policy, if you already have one
  • Your driving history documents
  • Claim experience letters from your past car insurance providers

If you’ve had car insurance in Canada before, insurers may be able to access your driving and claim histories automatically. However, if all your driving experience is from outside Canada, you’ll need to have documents to prove it. We’ll talk about driving history in the next section.

Choose your limits and deductibles

No matter which province you live in, you’ll have a few choices to make when you buy car insurance.

One of the main decisions is choosing a limit of coverage for third-party liability coverage. This limit is the maximum your policy will pay if you have to make a liability claim.

Each province has a minimum level of liability coverage for driving in that province. In most provinces, that’s $200,000. In Nova Scotia, it’s $500,000 and in Quebec it’s $50,000.

Don’t choose the lowest limit just to save money. If you’re found liable for damage or injury in a car accident and ordered to pay damages, liability coverage will cover those costs. But if your limit is too low, you’ll have to pay the rest yourself. Most insurers recommend a liability limit of $1 million to $2 million.

A deductible, meanwhile, is the amount of money you’ll have to pay when you make an insurance claim before your insurer pays for the remaining damage. A high deductible means you pay less for your insurance, but you’ll have to pay more if you make a claim.

Choose optional coverages

You can also choose to add any optional coverages to your car insurance policy. The main ones are collision and comprehensive, described above.

If you lease or finance your car, you’ll have to buy both. Otherwise, you can go without them if you choose. Just be aware that without collision coverage, you’ll have to pay for repairs yourself if you’re responsible for an accident. Without comprehensive coverage, you’ll have no coverage if your car is stolen, or if it’s damaged by fire, hail, or other non-collision events.

There are also many endorsements you can add to your policy. These add benefits like paying for a rental car while your vehicle gets fixed, or extending your policy to cover vehicles that you borrow or rent.

If you’re unsure about the right coverage for you and your car, make sure to speak with an agent or broker and ask questions. It’s also a good opportunity to test the service quality of an insurance provider.

Finish the process

If you’ve got everything ready, applying for car insurance can take as little as 5 minutes — especially if you do it online (like with Square One, for example). Buying online means you buy right away, and have your proof of insurance delivered via email.

You will need to have a copy of your proof of insurance to legally drive your car. Proofs of insurance are called pink cards in many provinces. Some provinces (like Ontario) allow you to keep a digital pink card on your phone. Others (like BC) require you to always have a paper copy in your car.

If you’re comparing multiple quotes, don’t just compare the final price. Consider how your experience was if you spoke with an agent or broker. You might find it useful to read online reviews about each company, too. And, make sure the coverage levels on each quote are similar.

ready for an online quote? Your time matters, and so does your car. Get a personalized car insurance quote in 5 minutes. That’s less time than it takes to wait in line for coffee. Car insurance is currently available in Ontario.

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Driving experience outside of Canada

Car insurance discounts for driving experience are very important. A record of safe driving can reduce the cost of car insurance by 50% or more for some people.

For someone new to Canada to maximize their car insurance discounts, there are basically three things they’ll need: a Canadian driver’s licence, their driving history, and their car insurance claim history.

Driver’s licences

Anyone who lives in Canada and wants to drive will need a Canadian driver’s licence.

There is a short period in which a newcomer may drive with their foreign licence, which varies by province. It’s usually between 30 and 90 days. Regardless, it’s best to get a Canadian driver’s licence as soon as possible.

Another benefit of getting a Canadian licence is that you’ll start building up your Canadian driving history and earning those discounts.

In Canada, each province issues driver’s licences to people who live there. The rules for each province are different. Most of the time, if you have a driver’s licence from another country, you can exchange it for a Canadian licence. Driver’s licences from some countries can be exchanged directly. From other countries, you may need to pass a driving test before you get a Canadian licence.

If you don’t have a driver’s licence from another country, you’ll need to start from the beginning with a learner’s licence.

To learn more about how to exchange your driver’s licence in your home province or territory, visit the appropriate page below:

Driving history

Driving history means a person’s history of speeding tickets, car accidents, and other vehicle-related offenses. It’s sometimes known as a driver’s abstract.

In Canada, driving history is attached to a person’s driver’s licence. Insurers can look up this history in various databases. Insurers can’t access any history from other countries. They will treat newcomers to the country as having no driving experience; they won’t get any related insurance discounts.

However, newcomers may be able to lower their insurance rates with proof of their driving history from other countries. This proof varies by country, but usually it’s a document that you request from whichever government agency handles driver’s licences. If the history document isn’t in English (or French, in some provinces), you’ll need to have it translated.

Unfortunately, insurers are not required to honour foreign driving experience. Some insurers count driving experience from North America, but not elsewhere. Experience from the US is usually fine, but anywhere overseas may not be. When shopping for car insurance, it’s worth asking each provider whether they’ll count your foreign experience.

Car insurance history

Car insurance history is different from driving history. It shows how long a person has held active car insurance, and lists all the claims they made during that time.

Car insurers consider both insurance history and driving history when they calculate the price of a car insurance policy.

Like driving history, it’s possible for the insurer to look up a person’s Canadian insurance history. To show your out-of-country insurance history, you’ll need a letter of experience from each insurer you had car insurance with in the past.

Also like driving history, it’s up to each insurer whether they will consider foreign insurance history. Most companies accept insurance history from the United States, at least. Again, any documents not in English or French will need a translation.

Commonly asked questions

How much does car insurance cost for a new driver?

Drivers who are new to Canada will often pay similar rates to inexperienced Canadian drivers. That’s because Canadian insurers can’t access their driving or insurance histories. Thus, newcomers are treated as though they are new drivers for insurance purposes.

That means car insurance can be expensive. The discounts for safe, experienced drivers can be huge — 50% or more in some cases. Without that discount, car insurance for someone without a driving history can cost anywhere from $1,500 to $10,000 per year, depending on the province.1

Do newcomers to Canada need car insurance?

Everyone in Canada needs car insurance if they want to drive their car. Car insurance is attached to a specific vehicle, so if you don’t own a car, you don’t need to buy car insurance. If you rent or borrow a car (with the owner’s permission) you’ll usually be able to use that car’s insurance if you need to — assuming it is actually insured.

How long does it take to get car insurance in Canada?

Most of the time, buying a car insurance policy in Canada takes only a few minutes. As long as you have the information you need for the application (details about your vehicle, your driver’s licence, and so on), the process should be very straightforward.

If you buy car insurance online, like from Square One, you can complete the whole process in as few as five minutes. Assuming everything checks out, you’ll receive your proof of insurance via email and you can be on the road right away.

If you buy car insurance in person or over the phone, the process can take a little longer (more like 30 to 60 minutes).

Can I buy a car in Canada as a temporary resident?

Visitors to Canada are certainly allowed to buy cars if they wish.

However, if you buy a car, you will need to purchase insurance to drive it anywhere. As a temporary visitor to Canada, car insurance may be expensive unless you can provide proof of your driving and insurance history. You’ll also likely need to have an address in Canada before most insurers will sell you a policy.

Does Canada recognize international driver’s licences?

Visitors to Canada are encouraged to get an International Driving Permit from their home country, especially if their foreign licence is not written in English or French.2 Visitors can drive with their foreign licence for a limited time, but someone moving to Canada must get a Canadian driver’s licence as soon as possible.

Driver’s licence rules in Canada are different in each province. For example, in British Columbia, visitors can drive on a foreign licence for up to six months.3 In Ontario, it’s just three months.4

Sources

  1. Drake, Tom. “How Much Is Insurance for a New Driver?” MapleMoney, 12 Aug. 2023, maplemoney.com/new-driver-insurance.
  2. Government of Canada. “Driving in Canada.” Canada.ca, www.canada.ca/en/immigration-refugees-citizenship/services/new-immigrants/new-life-canada/driving.html. Accessed 29 May 2024.
  3. Government of British Columbia. “Driving without a valid driver’s licence.” gov.bc.ca, 11 January 2021, gov.bc.ca/gov/content/transportation/driving-and-cycling/roadsafetybc/high-risk/without-valid-dl.
  4. Government of Ontario. “Drive in Ontario: visitors.” Ontario.ca, www.ontario.ca/page/drive-ontario-visitors. Accessed 29 May 2024.

Want to learn more? Visit our Car insurance resource centre for dozens of helpful articles to guide you through the complexities of car insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized car insurance can be.

About the expert: Daniel Mirkovic

A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.

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